Citi Personal Wealth Management

Continued Ascent in August

Monthly Market Snapshot: August 2020

Highlights

Stocks across most markets experienced impressive gains in August with the MSCI All Country World Index surging 6.0%. In the United States, the S&P 500 powered forward with a 7.0% gain and the tech-heavy NASDAQ climbed another 9.6%. Emerging markets underperformed, but still returned 2.1%. The 10-year U.S. Treasury yield jumped 18 basis points to 0.71%.

Worries that a surge of COVID-19 cases in July would cause the economic recovery to stall seem to have been misplaced. U.S. economic data have continued to surprise to the upside with third quarter U.S. real gross domestic product (GDP) tracking at just under 30% annualized. Combined with better-than-expected corporate earnings and an extremely supportive Federal Reserve, U.S. stocks seemed to be desensitized to risk. However, recent market action suggests that investors may be trimming positions in high-flying sectors.

Citi Private Bank’s Global Investment Committee (GIC) raised its global equity overweight by increasing its allocation to non-U.S. equities, particularly Europe and global small- and mid-capitalization shares. To fund the increase, the GIC reduced short and intermediate duration U.S. Treasuries from an overweight to neutral and slightly reduced its exposure to U.S. equities.